Amazon set to launch services from Australian shores

Amazon is well-known to consumers for the online store that sells nearly any product imaginable. Behind that, of course, is the string of physical warehouses it uses to stock and ship those products to doorsteps around the world at lightning speed.

For businesses, however, Amazon is best known for its virtual warehouses; the racks of computers and hard drives that companies and individuals can lease for a fraction of the cost of purchasing a similarly capable machine outright.

In what is perhaps the worst-kept secret of the Australian IT industry in recent years, Amazon is set to offer those services to companies from within Australian borders for the first time from Tuesday.

The move has been touted as a “game-changer" for high-risk sectors like finance and government, which are traditionally averse or prevented by regulation from storing critical data off Australian shores.

And although Australia is seen globally as a small and largely insignificant market in information industries, calls for a local version of the service appear to have paid off.

“That will allow not just the larger organisations to be more nimble, but also some Australian start-ups can get that horsepower behind them that previously they couldn’t afford to find," said, Fiona Floyd, chief information officer at Suncorp Life. “I think that’s also a game changer for us right now."

It is understood Amazon could announce its intentions on Tuesday at a ‘customer appreciation event’ it is holding in Sydney, which also features testimonials from the Commonwealth Bank and City of Melbourne.

The services would largely follow those it already offers from massive data centres on both coasts of the United States, Singapore, Japan and Ireland. These include the ability to store massive amounts of data on Amazon servers, or rent computing power to run high-performance tasks in what is known as a ‘public cloud’: a set of computer servers shared between many customers.

Related Quotes

Company Profile

Sources close to the launch, but unable to be identified due to non-disclosure agreements, confirmed Amazon has been talking to customers, particularly in the financial services and government sectors, as well as integration partners and hosting providers to establish a physical presence in Australia.

Discussions with government have also included plans to capitalise on the $37.4 billion national broadband network, which has been touted by communications minister Stephen Conroy as a foundation for the introduction of global cloud services.

The move follows nearly two years of planning and hints Amazon would enter. Rumours of a local launch were sparked once more after the company set up some smaller-scale locally-hosted services earlier this year.

Amazon’s servers are set to sit inside existing Australian data centres, rather than its own, largely located in Sydney. Several operators are believed to have been fitting out their facilities to accommodate the cloud provider’s plans in recent months.

However, some sources have indicated the location could be part of a transitional phase for Amazon, or at least part of a wider plan to build its own physical data centres in Australia.

Australian customers told The Australian Financial Review that one strategy being positioned by the e-commerce giant is to co-host the data centres underpinning its cloud services with the warehouses the company is also believed to be building for Australian customers of its online store.

An Amazon spokeswoman refused to comment.

Despite regulatory fears, financial services and government organisations have dabbled in cloud services from the likes of Amazon and competing services from Google and Microsoft.

The Australian Prudential Regulatory Authority directed banks in 2010 to comply with the same guidelines they use for offshoring resources and to ensure they employed “proper risk and governance processes" when weighing up options.

An APRA spokesman said the authority was unlikely to update these guidelines, despite the imminent arrival of a large-scale, on-shore cloud service.

Matt Oostveen, research director with analyst firm IDC, said the move would be a big change for risk-averse industries.

“It’s going to allay many of the fears and a lot of the uncertainty associated with the adoption of cloud services," he said.

“I think it’s going to be a catalyst and I also think it’s going to provoke a competitive response - I think it’s going to force the hand of other cloud providers that don’t have a domestic presence."